Slide 1: FY 2021 & Q4 Earnings Discussion & Supplementary Information
FY 2021 & Q4 Earnings Discussion & Supplementary Information
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding our future performance and market opportunity, inclu
Slide 3: Successful Execution
Successful Execution Non-GAAP Commission & Other Related Total Revenue ($M) Adjusted EBITDA(1) ($M) Expenses(1) as % of Revenue 73% y-o-y growth 130 bps reduction +$157M improvement $2 $6,421 82% 80% 81% 79% ($35) ($52) ($45) $3,721 78% 79% $2,386 ($168) ($155) 75% $885 $64 $187 $370 ($325) 2015 201
Slide 4: Compass is unrivaled, with tech-driven value proposition
Compass is … UNRIVALED, WITH TECH-DRIVEN VALUE PROPOSITION Industry leading brand and network in 69 markets and 28 states at FYE 2021 26,257 $254B Agents 2021 GTV(1) INDUSTRY LEADING IN AGENT RETENTION >90% 71 High annual retention and strong culture Principal Agent(3) FY 2021 NPS(2) Retention INCRE
Slide 5: Growth in agent count and productivity have driven rapid market share gains
Growth in agent count and productivity have driven rapid market share gains Our agents become more and more productive … … driving rapid GTV growth and market share gains 800 30,000 CAGRs 2018 – 2021: CAGRs 2018 – 2021: Total average agents - 51% 25,781 GTV - 96% $300 5.6% 6.0% 5.4% Principal agents
Slide 6: GTV per average Compass agent is more than 3x the average NAR agent
GTV per average Compass agent is more than 3x the average NAR agent(1) Our agents have grown GTV per average agent from $7.1M to $10.9M – and now generate 3.7x the GTV of the average NAR agent (up from 3.0x in 4Q2018) LTM GTV per LTM average Compass agent LTM GTV per LTM average NAR agent ’18 – ’21
Slide 7: Compass agents also grow their transactions faster than the market
Compass agents also grow their transactions faster than the market Growth in Transactions per Average Agent Transactions per Average Agent vs Industry(1) 23.8% 19.3% CAGR NM 3.0x 2.1x 9.7 faster 17.0% faster 17.1% faster 8.3 (+23.8%) (+11.4%) 7.1 (+8.8%) 5.7 8.3% 5.6% 0.0% 2018 2019 2020 2021 2019 2
Slide 8: Our penetration is still low; we have a massive addressable market
Our penetration is still low; we have a massive addressable market Compass brokerage covers only 47% of the U.S. population, but we plan to cover the entire country; our adjacent services business is nascent U.S. TAM $240B • Real Estate Marketing ($30b) Adjacent Services • Title Insurance & Escrow (
Slide 9: Consistently growing share across large & small markets, price points & tenure
Consistently growing share across large & small markets, price points & tenure Market Compass Avg. Market Avg. Competitive 2018 2019 2020 2021 (City Center) Price Point Price Point(2) Rank Average City Center Market Share by Market Tenure Manhattan(1) 11.0% 17.4% 25.5% 33.3% $1,493 $736 1 Washington
Slide 10: Our platform is reducing agent recruitment, retention and support costs
And our platform is reducing agent recruitment, retention and support costs Non-GAAP Sales & Marketing Costs(1) Quarterly Annualized Principal Retention as a % of Revenue 91% 93% 90% 92% 18.7% 15.5% 10.4% Industry Average of 68%(2) 7.4% Q1 '21 Q2 '21 Q3 '21 Q4 '21 2018 2019 2020 2021 Non-GAAP Operat
Slide 11: Do agents leave once their initial contracts expire?
Do agents leave once their initial contracts expire? The data shows “no” 2021 City Center % of Principals off Market (City Center) Launch Date 2021 Principal Retention Market Share Initial Contract(1) Manhattan 2012 33.3% 77% 95% Washington DC 2014 28.1% 83% 95% Boston 2015 15.4% 75% 93% Los Angeles
Slide 12: Top quartile users of our tech platform grow their business 2.6x faster
The top quartile users of our tech platform grow their business 2.6x faster than the bottom quartile and exhibit 98% annual retention Total Hours on Platform Per Day(1) Business Mix(2) The top 25% of Transaction Share 4 Hours & Compass teams who 3 Minutes used the tech platform most, used Our top qu
Slide 13: Agents love Compass
Agents love Compass Historical Compass Agent NPS Scores Top Reasons Why Agents Stay 76 77 • Culture & excitement about long- 71 term vision 68 • Technology Platform • Network of other Compass agents that supports business growth (e.g., referral) • Support & coaching • Inertia (inherent stickiness &
Slide 14: Agent economics by cohort have improved approximately 100 bps a year
Agent economics by cohort have improved approximately 100 bps a year As agent cohorts mature, the Commissions as a % of Revenue improves 20% 20% 18% 18% 17% • Commissions and Other as a % of Revenue improved by 130 bps in 2021 16% 16% 16% • Prior to 2021, trends in Commissions and Other as a % of Re
Slide 15: More diversified agent mix to drive ~190 bps of margin improvement by FY 2025
We expect a more diversified agent mix to drive ~190 bps of margin improvement by FY 2025 (33% of the total long-term opportunity of 584 bps) Compass Full Market Delta to Market Agents with: % of Commission Revenue Above $1m in annual revenue 60% 14% 45% Below $150k in annual revenue 4% 34% (31%) 1)
Slide 16: Revenue less Commissions as a % of Revenue to improve from 19.3% to 23.8%
We expect Revenue less Commissions as a % of Revenue to improve from 19.3% in 2021 to 23.8% in 2025 driven by improving agent economics and growth in adjacent services Revenue less Commissions as a % of Revenue Margin Bridge 3.9% 27.7% 2.0% 23.8% 1.9% 0.6% 19.3% 2021 Medium Term Medium Term Adjacent
Slide 17: Market share and Regional Contribution by market continues to improve
Market share and Regional Contribution by market continues to improve over time … Regional Contribution and City Center Market Share Our most mature markets are already generating 9.0% margins We expect smaller markets and lower Average Transaction Value markets to show similar profitability trends
Slide 18: Adjacent Services significantly increase revenue and profit per transaction
Adjacent Services significantly increase the revenue and profit per transaction Illustrative Adjacent Services Unit Economics Washington DC Region Title Case Study – Attach Rates Using $1M Home with Compass Revenue less Commissions $5K 2.5% Commission rate In 1Q2021, Compass acquired a title busines
Slide 19: Revenue Build and EBITDA in 2019 to 2021
Revenue Build and EBITDA in 2019 to 2021 Model Math Key Drivers 2019 2020 2021 Average Principal Agents 6,787 8,686 11,058 x Transactions per Average Principal Agent 12.8 16.7 20.4 = Total Transactions 87,158 144,784 225,272 x Average Transaction Value $1.12m $1.05m $1.13m = Gross Transaction Value
Slide 20: 2022 Expectations
2022 Expectations Revenue $7.9B - $8.1B 23% - 26% growth EBITDA At least $40m In a zero-growth market environment, we still expect 18-19% top-line growth ($1.2B incremental vs 2021) driven by … • Annualized revenue from 2021 recruited agents • Revenue from 2022 recruited agents • Agent productivity
Slide 21: Targeting 10% Adjusted EBITDA Margin by 2025
Targeting 10% Adjusted EBITDA Margin, or a minimum of $1.2bn of EBITDA by 2025 P&L 2019 2020 2021 Improvement 2025 Assumptions Revenue 100% 100% 100% 100% • Commissions & Other as % of revenue improves by 450 (450) bps with bps due to improving agent economics and growing adjacent services (250) bps
Slide 22: Compass & Industry Historical Transactions and Sales Volume Seasonality
Compass & Industry Historical Transactions and Sales Volume Seasonality We expect Q1 to reflect 16.5% of FY 2022 revenue NAR Historical Sales Volume Seasonality Q1 Q2 Q3 Q4 2016 18% 30% 29% 24% 2017 19% 30% 28% 24% 2018 19% 30% 28% 23% 2019 18% 29% 29% 24% 2020 18% 22% 31% 29% 2021 19% 27% 28% 25% 2
Slide 23: FY 2021 Highlights
FY 2021 HIGHLIGHTS FINANCIAL(1) OPERATIONAL $6.4B | +73% 11,058 | +27% FY ‘21 Revenue & Y-o-Y Growth FY ‘21 Average Number of Principal Agents & Y-o-Y Growth 80.7% | -130 BPS 26,257 | +35% FY ‘21 Non-GAAP Commission & Other Related FY ‘21 Total Agents & Y-o-Y Growth Expenses as a % of Revenue & Y-o-
Slide 24: Q4 2021 Highlights
Q4 2021 HIGHLIGHTS FINANCIAL(1) OPERATIONAL $1.6B | +31% 12,176 | +32% Q4 ‘21 Revenue & Y-o-Y Growth Q4 ‘21 Average Number of Principal Agents & Y-o-Y Growth 80.7% | -130 BPS 26,257 | +35% Q4 ‘21 Non-GAAP Commission & Other Related Q4 ‘21 Total Agents & Y-o-Y Growth Expenses as a % of Revenue & Y-o-
Slide 25: Financial Tables
COMPASS Financial Tables
Slide 26: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (in millions, unaudited) 24
Slide 27: Condensed Consolidated Statements Of Operations
Condensed Consolidated Statements Of Operations (in millions, except share and per share data, unaudited) Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Revenue $ 1,612.1 $ 1,230.3 $ 6,421.0 $ 3,720.8 Operating expenses: Commissions and other related expense (1) 1,347.3
Slide 28: Condensed Consolidated Statements Of Cash Flows
Condensed Consolidated Statements Of Cash Flows (in millions, unaudited) 26
Slide 29: Net Loss to Adjusted EBITDA Reconciliation
Net Loss to Adjusted EBITDA Reconciliation (in millions, unaudited) 27
Slide 30: Reconciliation of Operating Cash Flows to Free Cash Flow
Reconciliation of Operating Cash Flows to Free Cash Flow (in millions, unaudited) 28
Slide 31: Reconciliation of GAAP to Non-GAAP Operating Expenses
Reconciliation of GAAP to Non-GAAP Operating Expenses (in millions, unaudited) 29
Slide 32: Key Business Metrics and Non-GAAP Financial Measures
Key Business Metrics and Non-GAAP Financial Measures (unaudited) 30
Slide 33: Selected Non-GAAP Operating Expenses
Selected Non-GAAP Operating Expenses (in millions, unaudited) 31
Slide 34: Investor Contact / Media Contact
Investor Contact Richard Simonelli 973-896-8184 richard.simonelli@compass.com Media Contact Chris O'Brien 917-626-2345 chris.obrien@compass.com